Criticism of Prime Minister Benjamin Netanyahu over the 2013 budget and economic policy is increasing. A very senior official in Jerusalem told "Globes" that, as of now "there is no economic policy for 2013. The ship is sailing rudderless."
It is necessary to cut NIS 11-12 billion from the 2013 state budget, an unprecedented amount, in order to meet the expenditures cap, which has already grown by 5%.
Although no official growth and tax revenues forecast has been submitted, sources inform ''Globes'' that the GDP growth forecast is less than 3%. Tax revenues, including revenues from trapped profits, are projected to still result in a shortfall of NIS 3-5 billion. The Bank of Israel believes that with more tax hikes, the deficit will reach 3.5% of GDP, and even this forecast includes a NIS 5 billion tax shortfall.
"There is a need for another austerity plan in 2013, even if we get all the money from the trapped profits and stricter tax collection, said a senior Ministry of Finance official. The ministry, however, is more worried about the handling on the spending side, and how to cut NIS 11 billion from the budget.
Top Ministry of Finance officials say that, beyond the fact that there is no economic policy for 2013, the Israeli economy will begin a very challenging fiscal year with a deficit of 4.1% of GDP, a figure that is characteristic of years of severe recession, even though GDP growth is around 3.5% - nothing like a recession, and one of the fastest growth rates in the West. "The figures are not good, and the rest of the year looks worse. Macroeconomic data do not justify such a large deficit in 2012. It is a bad starting point for 2013," said the senior Ministry of Finance official.
No budget
Another problem is also emerging. At the current rate of progress, even if a budget is drawn up for 2013, it will not be submitted to the Knesset by November 1, as required by law. The Netanyahu government will therefore violate the Basic Law: The State Economy, which mandates the submission of the budget on this date. Budget meetings are irregular, and no cabinet meeting has been scheduled to discuss the 2013 budget.
"The longest-serving Ministry of Finance officials are saying that the situation is unprecedented. There has never been such a thing - no budget by mid-September," said another senior Ministry of Finance official, who emphasized that the ministry had prepared all the groundwork necessary for drawing up the state budget.
The sources said that the possible collision between the Basic Law and the lack of a budget is worrying Attorney General Yehuda Weinstein, who is already in contact with Netanyahu on the matter. Top officials in Jerusalem told "Globes" today that, while there is a legal obligation to submit the budget by November 1, there are no penalties for not doing so.
Governor of the Bank of Israel Prof. Stanley Fischer is also worried by the situation. "The Governor knows the situation. The fact that he has not made a speech like the one at the Caesarea Conference does not mean that he isn't worried, and it does not mean that he isn't saying what he has to say to the relevant people," said a source in his entourage.
Published by Globes [online], Israel business news - www.globes-online.com - on September 10, 2012
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